Novatek Microelectronics Corp (聯詠), which makes driver ICs used in displays, yesterday gave positive guidance for this quarter, saying it expects revenue to grow by as much as 27 percent sequentially, due to inventory replenishment demand ahead of China’s June shopping season and adoption of its new high-end chips.
Revenue is expected to expand to NT$29.5 billion to NT$30.5 billion (US$960.85 million to US$993.42 million) this quarter, representing quarterly growth of 22.66 to 26.82 percent compared with NT$24.05 billion in the first three months of this year.
“After quarters-long inventory digestion in the supply chain, some of our customers have brought their inventory back to normal levels in the second quarter,” Novatek president Steve Wang (王守仁) told a virtual investors’ conference.
Photo: Grace Hung, Taipei Times
Novatek reduced its inventory to a seasonal level last quarter, Wang said.
“Chinese customers are rebuilding inventory ahead of sales promotions starting on June 18. Besides, some of our new products are entering mass production in the second quarter,” he said.
All of the company’s three major product lines would grow slightly this quarter, with small and medium display driver ICs showing the most growth, thanks to increasing demand from customers in China for OLED driver ICs used in new smartphones, Wang said.
Novatek has started shipping new display driver ICs for virtual reality devices, which would also help, he said.
Large display driver ICs would be supported by inventory replenishment demand for TV and computer display driver ICs, Wang said.
Slower growth is expected for TV system-on-a-chips, he added.
As macroeconomic uncertainty lingers, market demand visibility for next quarter is limited, but Novatek still has high hopes that the year-end shopping season will stimulate electronics sales in North America, Europe and China, he said.
Gross margin is expected to be between 38.5 percent and 40.5 percent this quarter, edging down from 41.91 percent last quarter, Novatek said.
Excluding nonrecurring engineering income and reversal of inventory write-down from last quarter’s figures, gross margin this quarter should be similar to last quarter, the company said.
An increase in shipments of high-end display driver ICs used in gaming notebook computers and monitors would help Novatek fend off headwinds better than its competitors, Wang said in response to an investor’s question about why the company was expecting a less steep decline in gross margin than its peers.
Novatek reported better-than-expected profit last quarter, with net profit expanding 17.54 percent to NT$4.75 billion, compared with NT$4.04 billion in the fourth quarter of last year. That represented an annual decline of 57.32 percent.
Earnings per share improved to NT$6.64 last quarter from NT$6.64 a quarter earlier, but declined from NT$18.3 a year earlier.
The company said that revenue and gross margin exceeded its guidance last quarter.
Novatek already performed well last month, with revenue rising to NT$9.96 billion, the highest since May last year. That represented a monthly increase of 8.5 percent from NT$9.18 billion, but an annual decline of 19.14 percent.
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